Despite a 3.4% rise in sales for the third quarter, L'Oréal failed to meet analysts' expectations. The deterioration in the Chinese market weighed heavily on the beauty giant's results, with sales down 4.4% in Asia.
The results of beauty giant L'Oréal were published on Tuesday 22 October and came in below expectations. Although the group posted positive figures for the third quarter of the current financial year, with a 3.4% increase in sales compared with the same period last year, Bloomberg analysts were expecting a 6% increase.
Total sales for the quarter came to 10.28 billion euros, compared with 32.4 billion euros for the first nine months of the current year, representing an increase of +6%.
We can deduce from this that the slowdown in the third quarter is essentially due to the deterioration in conditions on the Chinese market, which is affecting a large proportion of European houses across all sectors. Top-of-the-range products, however, managed to hold their own: sales in the premium division (Lancôme, Yves Saint Laurent, Giorgio Armani) rose by 3.4% on a like-for-like basis, and by 5.3% on a reported basis, showing three consecutive quarters of acceleration.
Nicolas Hieronimus, Chief Executive Officer of L'Oréal, also commented on the situation in China when the figures were announced: ‘What was less expected, or in any case worse than hoped, was the situation on the Chinese market, which not only failed to improve over the summer, but is tending to be even more difficult’. Hieronimus is nonetheless optimistic for the future: ‘We believe in the future of this market and hope that the government stimulus will help to improve consumer confidence’.
Overall third-quarter sales in Asia nevertheless fell by 4.4% to €1.95 billion. L'Oréal continues to rely on its excellence division, which posted double-digit results in North America, Japan and the vast majority of emerging markets. Luxury is one of the most interesting growth drivers for the French group, which is still very committed to research and is forging more and more partnerships with biotech start-ups. Last August, the beauty giant acquired a 10% stake in the Swiss pharmaceutical company Galderma.
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